June 19, 2018 The Army’s Modular Handgun Procurement The Army Modular Handgun System (MHS) is a weapon Previous Replacement Effort: A 13-Year system produced by Sig Sauer that is to replace the Beretta Process M9/11 pistol, which has been used by the U.S. Army since The Army started a replacement program for the Beretta in 1986. The MHS will fire a 9mm bullet and comes in two 2004 (then-called the Future Handgun System). Shortly sizes, full and compact. The Army is also procuring thereafter, the Department of Defense decided to combine customized ammunition to increase accuracy and reliability this effort with the U.S. Special Operations Command’s over the life of the handgun. Combat Pistol program. This combined effort resulted in the Joint Combat Pistol program. The Army eventually The Army launched its effort to replace the Beretta in 2004, removed itself from this program in September 2006 to adopted the Capabilities Production Document from the Air pursue its own effort. Force in 2013, released the Request for Proposal in August 2015, and awarded a contract in January 2017. Criticisms of the Procurement Process Frustrated with the extended time the procurement of the The Contract handgun had required, Army Chief of Staff General Mark The MHS contract with Sig Sauer is a 10-year, firm-fixed- Milley reportedly stated in a March 10, 2015, address, price, indefinite delivery, indefinite quantity contract with a “We're not figuring out the next lunar landing. This is a cap of $580 million. A firm-fixed-price contract provides a pistol. Two years to test? At $17 million? You give me $17 unit price that is not subject to any adjustments based on the million on a credit card, and I'll call Cabela's tonight, and contractor’s costs in meeting the contract requirements. I'll outfit every soldier, sailor, airman and Marine with a Indefinite quantity means the Army can order as many or as pistol for $17 million. And I'll get a discount on a bulk few units as it requires, up to the $580 million contract cap. buy.” To date, the Army has obligated approximately $8 million. Echoing frustration over how the procurement was being Under the terms of the contract, the Army cannot release executed, a report from Senator John McCain, America’s unit price data. However, the contract sets the price for the Most Wasted: Army’s Costly Misfire, highlighted a number handguns, associated ammunition, supporting accessories, of issues, including length of procurement effort, length of training devices, and technical data. time the Beretta had been in service, lack of clarity within the request for proposal (RFP) regarding weapon caliber, The purchase of one MHS includes spare magazines, and concerns over having a single vendor for both the instructions, weapon-specific tools, a holster, and weapon and ammunition. Ultimately, the report ammunition pouches. The separate training device kit recommended the suspension or cancellation of the RFP allows the use of man marker rounds and blanks during until the caliber issue was resolved. (The RFP was not training situations. The ammunition and suppressor kits’ cancelled.) prices are fixed and they are available for purchase through the contract. The May 2017 Section 809 Panel Interim Report also criticized the Army’s handgun procurement for the length Planned Quantities of the procurement process from start to finish, number of The Army currently plans to buy 238,215 systems. A pages in the request for proposal, and the cost of proposal breakout of the number of full size versus compact versions development which reportedly led some leading weapons to be purchased is based on the Army Modified Table of manufacturers to decline to compete for the contract. Organization and Equipment per unit. The ammunition quantities are to be comparable to the required amount per Counterpoint Army Standards in Training Commission. In responding to an inquiry by the Congressional Research Service about the various criticisms, the Army discussed The other military services intend to use the Army’s the time required and complexity of the MHS process. The contract to buy weapons. The Air Force announced that it Army explained that the entire process was focused on will buy 130,000 compact weapons and the Navy intends to vendor inclusion, flexibility, and presenting the opportunity field 70,000 compact versions of the weapon. While the for industry to present multiple submissions utilizing a wide Marine Corps has not officially announced its intentions, range of technologies. They emphasized that the intent was the proposed FY2019 budget has allotted funds to buy always to get the best equipment to the soldiers. 35,000 compact systems. Some observers argue that acquisition statutes and regulations exacerbated the procurement process through www.crs.gov | 7-5700 The Army’s Modular Handgun Procurement required bureaucratic processes that delay decision-making, Based on these assumptions, the services could spend and contract clauses that add numerous pages and clauses to approximately $38 million annually for handgun systems. the RFP, and add administrative costs. The ammunition purchase increases over the 10-year period with year 1 requiring approximately $2.7 million for Price Determination and Extrapolation ammunition and increasing annually with year 10 requiring While cost data for the Army contract is not publicly $27 million for ammunition. This would result in a total of available, the cost of similar weapons, accessories, and approximately $552 million dollars on weapons and ammunition can be found at major firearm sellers. ammunition over the life of the 10-year contract. CRS compared the total cost of the current MHS contract to The MHS contract with Sig Sauer is capped at $580 the prior Army contract with Beretta. CRS also compared million, approximately $28 million (5%) above Cabela’s the MHS contract to a similar purchase at Cabela’s, the gun current price. However, this analysis does not account for retailer mentioned by General Milley. any commercial price increases over the next ten years. If Cabela’s increased its costs by 1% annually just for the The Army’s 1985 contract for the Beretta M9 was for handguns, the commercial cost comes to approximately $10 315,930 weapons for approximately $75 million and by million below the Army’s cost cap. 1988 had been increased to 321,260 weapons for approximately $77.3 million. With inflation, this contract in The Army contract also contains items not included in a 2018 would be approximately $178.9 million. The contract standard commercial purchase, including training, training did not include ammunition. equipment, and customized ammunition. In addition, the Army contract includes the purchase of technical data. The Cabela’s sells the Sig Sauer P320 full-size pistol for technical data allows the services to maintain, modify, $799.99 and a Sig Sauer P320 compact pistol for $649.99. potentially upgrade, and extend the service life of the Additional prices researched were for the holster ($49.99) weapons and ammunition. and ammunition ($.26 per round). The P320 closely approximates the Army MHS. Was the Army Successful? From an acquisition perspective, many analysts consider the Table 1 reflects an estimated purchase quantity of weapons, MHS requirements timeline, bureaucratic burdens, and rounds of ammunition, and total cost for the services. This excessive paperwork a signal example of all that can go analysis is based on the following assumptions. wrong with defense acquisition. 1. The military services purchase their full Based on the final cost of the weapon program, the Army requirement, plus an additional 10% for appears to be procuring the weapon at a competitive cost, weapons lost/damaged. particularly if the value of the intellectual property is 2. Ammunition is estimated at 200 rounds included. per weapon. CRS did not examine the capability of the weapon system 3. Weapons purchases are allocated equally or whether it fulfilled Army requirements. over the 10-year contract with corresponding ammunition purchases made annually. Table 1. Proposed Weapon/Ammunition Annual Procurement Cost Moshe Schwartz, [email protected], 7-1463 Ammunition Total Year Weapons Jason A. Purdy, [email protected], 7-5050 Rounds Cost IF10911 1 52,054 10,410,800 $ 43,074,166.92 2 52,054 20,821,600 $ 45,780,974.92 3 52,054 31,232,400 $ 48,487,782.92 4 52,054 41,643,200 $ 51,194,590.92 5 52,054 52,054,000 $ 53,901,398.92 6 52,054 62,464,800 $ 56,608,206.92 7 52,054 72,875,600 $ 59,315,014.92 8 52,054 83,286,400 $ 62,021,822.92 9 52,054 93,697,200 $ 64,728,630.92 10 52,054 104,108,000 $ 67,435,438.92 www.crs.gov | 7-5700 .